## Making Choices

Over and over people tell me that they’re “just not good with numbers.” The numbers don’t mean anything to them. One dollar, \$10, \$100, \$1000, a million? Is it just a bunch of extra zeros tack on? Many people just can’t relate.

So how about instead of focusing on numbers you focus on choices you must make instead. Let’s say, for example, you’re heading off to buy a new coat. You’ve got a budget of \$80, but when you walk into that fancy schmancy store you love to “just browse” in you fall in love.

The coat is on sale. It looks fabulous on you. It’s \$320. That’s four times what you planned to spend, three times more than you have. So you rationalize. Hey, that’s just an extra \$240… what’s \$240… not all that much, right? You can find \$240 to have this fabulous coat that you can wear for the next ten years. Hey, that’s just \$24 a year… so worth it!

Stop.

Don’t look at the numbers in terms of numbers because being the delusional fool that you are, you can talk yourself into anything. Instead look at the choice you’re going to have to make between two sumthin’ sumthin’s that you want.

On the left side of the scale is the \$240 extra for the coat. On the right side of the scale is the ________________________________ (what’s your pleasure?) Fill in the blank with lunches out, daily designer coffee, drinks with friends, the concert tickets you were planning to buy.

You have a finite amount of money so you have to make a choice.

Will you give up coffee on the way to work for 48 days? Is that gorgeous coat worth it to you to make your own cuppa at home and avert your eyes as you walk past the coffee house?

Will you pack your lunch every day next month so you have the money for the coat? Will you forgo the baseball game, the theatre tickets, seeing your favorite band with your old roommates from university? What will you give up in real tangible terms to have that coat?

Believe it or not, money really isn’t about numbers, it’s about choices. Do you know what you’re willing to give up in order to get what you THINK you want?

### 23 Responses to “Making Choices”

1. This is a great message. I think the start is knowing the difference between what is a need and an extra. Foregoing the extra luxuries only happens if you know which items the are in your budget.

I take the amount of money NET I earn per year and divided it by the number of hours I work x weeks, excluding vacations and Christmas. That is my true wage per hour. How much time do I have to give up working to spend \$240? Since it’s tax day in Canada, this exercise should be pretty easy for everyone.

2. It is so easy to rationalize a purchase. Budgeting and having goals for my money has helped me to avoid unnecessary spending.

3. I love this Concept! I started thinking like that recently. I wanted to get a new pair of jeans and mind you not very expensive 49.99 CAD. But I decided to make sure I made and brought my lunch to work the whole week. So when I spent the money on the jeans it was like spending my lunch money that I didn’t spend on lunch that week. I agree that rationalizing a purchase is easy. And I have also been the person to buy the thing I wanted knowing full well that I can’t do this or the other thing I planned because that money is now spent.

4. I think the one thing I’ve learned repeatedly from this website (and that’s mostly because I’m thick-headed and stubborn) — is that money is finite.

It ends.

There is a point where there is no more.

It adds up, and disappears… and then there is none.

With all the different accesses to money, I sell online, I get paid every two weeks, I have a line of credit, I have credit cards… it is difficult to realize that the money train has an end point, and the the faster I spend it, the faster I will come to the end of the gravy train.

Since I opened my online craft business… I try to think of things in terms of what I make, how much I sell it for… and in crafting… you make like \$1 an hour if you’re lucky sometimes…

But it is still very difficult to realize that… It’s easy to fool yourself into thinking you can afford something… it’s even easier when you don’t have credit debt etc… but after the year goes by and you don’t have the savings you thought you would, and you realize you wasted it on consumerism….

It’s a lesson I don’t mind getting hit over the head with every two weeks…

5. I guess I am just the opposite. I finally bought myself a new winter coat last winter (for the winter that wasn’t!). I saw a particular coat I wanted at my favourite store. It was a 3 – 1 style, purple & black, my favourite colours. Orginal price tag was \$200. Too much money. After a few months, it was down to \$160. Which was still too much. Then last November while visiting family a plane ride from home, the store had a one day sale. 50% off all coats. So my coat was now \$80. Then I used a \$25 rewards card for the store. \$55!!! Only problem was that store didn’t have my size. So I bought a smaller size, and took it to a local store when I got home to exchange it. I’ve always avoided spending more then we have to. It’s the surprises that always got me.

Overspending has never been our problem. It’s always been bad planning. Or rather, no planning. The car needs \$1000 work. On the line of credit. I forgot a birthday coming up, \$50 on credit. But I’ve learned my lesson, and that doesn’t happen anymore.

6. Hi Gail,

I work at a literacy organization in Brantford, the Brant Skills Centre. There are so many Canadians that are not comfortable with their math skills. In a survey, 72% of Canadians said are not fully confident in their math and money management skills.

I understand that sometimes it comes down to choices, but learning to make better financial choices includes improving your math and money skills.

I think it is so important to let Canadians, no matter how old you are, you can get help to improve your math skills and learn how to budget your money. If someone is uncomfortable with going to their local adult literacy organization, there are amazing websites they can utilize to learn and improve their math skills.

Find a literacy organization in Ontario http://www.on.literacy.ca/
Free online learning http://www.gcflearnfree.org/
Free online learning classes http://learninghub.ca/Home.aspx

7. In college, friends would balk at me when I’d say “I can’t afford to go out tonight.” They’d go see a movie twice every weekend. More often than not, I’d say ‘no’. But they would ask me, how can I say I can’t afford to go a movie when my boyfriend at the time (now husband) and I used to go to 3 or 4 Leafs games in a season?! I tried explaining, “I can’t afford to go to the movies BECAUSE I want to go to the Leafs games.” If I have \$400 to spend on ‘entertainment’ – I could spend \$400 on Leafs tickets… or I could spend \$400 on a dozen nights out to the movies. I couldn’t do both. My husband I had a great time at those games and skipping a movie I didn’t really want to see anyway was not a big deal. I don’t regret the money I did spend, nor do I regret what I had to ‘give up’. It is definitely about choices!

8. I often look at potential purchases in the terms of a day’s pay or half a day’s pay. Am I willing to spend a day’s pay, two day’s pay, or more on new shoes? Sometimes yes, sometimes no. If I’m going to an antique show I’ll often say no more than one day’s pay can be spent, unless something exceptional is found.
I take into consideration an item’s expected lifespan when making more expensive purchases. I spent a lot on a custom made sofa that is still in good condition after almost twenty years and will be worth reupholstering when the time comes. This seems better than buying a sofa that only lasts a few years before it start to show wear and has to be replaced. I think it’s reasonable to divide the cost by the number of years something will last, whether it’s furniture, clothing, jewelery, etc.

9. Our focus is always on doing everything necessary to retire early, while still taking a major trip with the kids every year. To that end every other cent is tracked and scrutenized. For rough numbers we assume we’ll need \$3k/mth to fund the retirement years before ~65 when the various government and company pensions start to kick in. \$3k/mth means \$100/day. Therefore every \$100 wasted now delays my retirement by a day. It’s a bit of an over simplification, but boy does it ever cause you to think about every non essential expense. Would spending the \$240 on that coat be worth delaying my retirement for 2.4 days? Even the small stuff can be converted into a lost opportunity to put it in perspective. Do we want to grab that nondescript fast food meal or would that \$25 be enjoyed more as admission for 2 to the Louvre next time we’re in Paris. Mystery meat vs the Mona Lisa? Not a tough choice in my mind. Of course I run the risk of never doing anything beyond the bare essentials. On rare occasions we do eat out or purchase something we could obviously do without if things were desperate. The difference it was done with thought, consciously knowing that the money was coming out of the trip or retirement funds, and when you don’t do it often, you seem to get a lot more enjoyment from the little splurges.

10. For me, looking at money as a finite resource caused me more misery, so I’ve decided instead to look at my income as infinite but limited. I have enough for house and home, small extras, and debt repayment. If I have to shuffle because I spent more on groceries or gas, then I have to shuffle, and when the next “infinite” pay cheque comes in, I rebalance then. I used to get so frustrated when I’d go over in one area and have to take from another, but I’m learning that I may have gone over because we took a family drive that ate up 3 days worth of “getting to work” gas, but it was worth it, know what I mean? Yes, I understand that money in the bank between pays in ‘finite’, but how it gets spent from pay to pay has to have some flexibility. I’m not saying blow it all for a trip to Vegas, but some people have to learn to stop sweating that the \$20 over here has to come out of \$20 that was allotted for there. Ultimately you still have to pay out the \$20 anyway right?

But as you’ve pointed out, if you want those new shoes, that big honkin’ juicy roast, or a weekend of renting movies, then do it as long as you know you can course-correct somewhere else without short-changing the mortgage, the heat or hydro, or whatever.

Oh, and it doesn’t hurt to read “The Magic” for a new feel-good look into life too! I know people harp on Rhonda Byrne’s books because they’re thinking of riches and wealth as financial, but I’m getting so much more out of this positive and gratitude thinking that aren’t at all financial. Sorry Gail, a little feel-good plug in here!

11. When someone asks us to go out or spend money on something that is not in our money plan, we simply say, “We’re not choosing to spend money on that right now.” It’s great… You can blame it on your budget. Your friends don’t feel bad, or your family member who wants that item knows that it’s just not a choice the family is making right now. Money is really all about choices, and it’s so much easier when we understand that.

12. @JMK, It really puts every purchase in perspective the way you think about it. I like your way of thinking.

13. I weigh the pros and cons when I purchase something. I don’t buy willie nillie either. I have to have the following 4. Its on sale, I earned a gift card, I get a percentage off and its under \$50 after the discounts. Why? I am on an income so fixed there is no reversing. I get all my clothes that way. However I don’t have to keep up appearances for the office. I wear what’s comfortable. I don’t look straggly. However I don’t wear this year’s styles. I will be treating myself (pay full price) for new glasses. No coupon. My last pair of glasses lasted me, so far, 5 years. Good article Gail on the Domino affect when spending too much on temptations; what will we give up and how will I rationalize it.

14. Great blog, sure enjoyed it and all comments. I too try to make choices and try to teach it to my oldest who wants an Xbox. He has the Wii System but Xbox lately has all the exciting games which he sees. We told him to make the money and once he makes the cash he can personally buy the Xbox himself.

Thanks Gail, sure enjoy reading your blogs

15. I use the cost-per-day justification when I have to make a big purchase of a NEED. Honestly, it is the only way to gulp down that cost. Like last year I needed to buy a new wig (I have alopecia) and it was going to cost \$2500. I fretted and fretted over spending so much (even though I had the money). And it really helped when my friend pointed out that it would cost about \$6.85 per day (and its something i wear every day). And if i take good care of it, it will last 5 years so that \$1.37 per day- about the cost of a cup of coffee.

So yes, you can try to justify the cost per day, but it helps to see what you would have to sacrifice each day (eg a coffee) to equal out that expensive purchase.

16. stamperitis Says:
April 30, 2012 at 12:36 pm

Loved everyone’s careful thoughts on this. This time of year I tend to go to the garden centre and lose it. Shall try to keep this thinking in mind. On second thoughts, I should really have a line item on the budget specifically for this time of the year… Hmm, I see that next year things will be different!

17. I’ve always looked at purchases that are wants and not needs as payment for my bills. For example: That pair of jeans I really want to buy, but don’t really need, should be used to pay the phone bill. I’ve always had a problem spending extra money on myself. I was a single parent with no child support coming in for about 17 years. Money was always very tight. Now that my kids are older they don’t need my support but I’ve been playing catch up with getting my credit in a great place. Thanks to Gail showing me how, I’ve accomplished this. Now it’s savings, RRSP’s and bills. If there’s a scrap left over I may get a new pair of shoes. But I still have to save for it to feel as if I’ve earned it.

18. This is how I think of things too. And really it’s all a budget is, just making choices. Where are you going to spend your money to have the most value for you. It helps for my boyfriend too to see things as a choice. He gets frustrated when I say ‘no we can’t afford that’. If I put it as ‘you can have that or you can have money to start your own business’ (which has been his life-long dream that he never set aside the money to make happen) it makes it easier.

19. Anonymous Says:
April 30, 2012 at 5:51 pm

You’ve given me something to think about as I contemplate a YMCA famiy membership at \$106/month. Will I work 4 hrs extra per month to cover the cost? What \$100 expense will I give up in order to pay this membership fee? Certainly food for thought.

20. Super idea Gail! I do this often but think I need to do more of it! I would love a bigger house but then consider what I’d have to give up. I would also love a cleaning company to clean and friends (who have them) have said “It’s only \$_______”. True and it’s peace of mind but then my response is: “But that’s \$________ that I wouldn’t have for (something else we do that’s important). You’re bang on as always – it’s about choices!

@JMK – I like your way of thinking! Good strategy! But I also hope you are finding ways to splurge a little and enjoy life now as well. I’m not trying to be a downer – just that I know people who sacrificed and put off trips, etc. thinking they will enjoy when they retire only to encounter a health issue, etc. Hopefully you are living it up a little now too and will not be in that boat later! All the best with it!

21. Yes Life is about Choices! Choose to Enjoy large Debt or Choose to get out!
I Choose Not to have “Any” Credit Card Debt.
I do though Choose to Take a Vacation Each Year!
I do Choose to buy some brand name clothing ( but not excessive… and I don’t own a jacket worth more than \$150 ever ( but I do own a few brand name jeans that cost over \$100)
You have to own your choices – Good or Bad!
Very Good Article!

22. JMK — I like that way of thinking

23. ” . Do you know what you’re willing to give up in order to get what you THINK you want?”
He** yes, invest in QUALITY

As per Linda= ” I spent a lot on a custom made sofa that is still in good condition after almost twenty years and will be worth reupholstering when the time comes. This seems better than buying a sofa that only lasts a few years before it start to show wear and has to be replaced.”
The above stated is a perfect example of investing in quality

Learn to be able to identify quality when you see and feel it….
Example feel the linen items made in Turkey, Portugal,Italy